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GS Paper: GS3

  • Plantation Agriculture – RISPC, Tea Act, etc.

  • Minimum Support Prices for Agricultural Produce

  • Disinvestment in India

  • Goods and Services Tax (GST)

    This article would focus on Goods and Services Tax (GST), as we know discussion on GST bill is going on in winter session of Parliament. So, let’s just take this in brief here.

    gst-head-for-blog

    What is the Goods and Services Tax (GST)?

    • As the name suggests, the GST will be levied both on goods (manufacturing) and services.
    • A single, comprehensive tax that will subsume all the other smaller indirect taxes on consumption like service tax, etc.
    • This is how it is done in most developed countries.

    Let’s know the structure of GST

    • It would have a dual structure, a Central component levied and collected by the Centre and a state component administered by states.
    • At the Central level, it will subsume Central excise duty, service tax and additional customs duties.
    • At the state level, it will include value-added tax(VAT), entertainment tax, luxury tax, lottery taxes and electricity duty.
    • The central government will have the exclusive power to levy and collect GST in the course of interstate trade or commerce, or imports. This will be known as Integrated GST (IGST).
    • Tobacco and tobacco products will be subject to GST. The centre may also impose excise duty on tobacco.

    Which products are exempted from the purview of GST ?

    • Alcohol for human consumption has been exempted.

    Initially, GST will not apply to:

    • Petroleum crude
    • High speed diesel
    • Motor spirit (petrol)
    • Natural gas
    • Aviation turbine fuel(ATF)

    The GST Council will decide when GST will be levied on them.

    What is the scope of GST Council?

    The GST Council will consist of –

    • Union Finance Minister (as Chairman)
    • Union Minister of State in charge of Revenue or Finance.
    • Minister in charge of Finance or any other Minister, nominated by each state government.

     

    GST Council will make recommendations on –

    • Taxes, cesses, and surcharges to be subsumed under the GST
    • Goods and services which may be subject to, or exempt from GST
    • The threshold limit of turnover for application of GST; (d) rates of GST
    • Model GST laws, principles of levy, apportionment of IGST and principles related to place of supply.

    The GST Council may decide the mechanism for resolving disputes arising out of its recommendations.

    What are the advantages of GST?

    • It speeds up economic growth of India, as it will add about 1% to India’s GDP growth.
    • Replacing the cascading effect created by existing indirect taxes.
    • Uniformity in tax regime with only one or two tax rates across the supply chain as against multiple tax structure as of present.
    • Improvement in cost competitiveness of goods and services in the international market.

    Why 1 per cent Additional tax on supply of goods should not be there?

    • It will be levied by centre in the course of inter-state trade or commerce, this provision impedes a key objective of GST.
    • The GST regime aims to create a harmonised national market for goods and services, and the GST Bill reinforces this objective.
    • The levy of the additional tax distorts the creation of a national market, as a product made in one state and sold in another would be more expensive than one made and sold within the same state.
    • Also, the 1% tax will result in cascading of taxes.
    • This effect will be magnified if the production and distribution chain passes through several states, and if the 1% additional tax applies at each state.
    • The burden of the cascading tax will be borne by the final consumer of the product.

    Let’s look at the highlights of Constitution (122nd Amendment), GST Bill, 2014

    • The Bill amends the Constitution to introduce the goods and services tax (GST).
    • Parliament and state legislatures will have concurrent powers to make laws on GST.
    • The Bill empowers the centre to impose an additional tax of up to 1%, on the inter-state supply of goods for two years or more. This tax will accrue to states from where the supply originates.
    • Parliament may, by law, provide compensation to states for any loss of revenue from the introduction of GST, up to a five year period.

    What is preventing GST from being a reality?

    • The GST constitutional amendment bill was passed in the Lok Sabha in May 2015.
    • It has been held up in the Rajya Sabha due to objections being raised by the Opposition regarding the Bill as well as issues with no direct connection to GST.
    • The Bill was also placed before a Rajya Sabha select committee, which made its recommendations regarding changes to the Bill. The Cabinet cleared these changes.

    What are the Objections from Opposition?

    • The Congress wants a provision capping the GST rate at 18 per cent to be added to the Bill itself.
    • It also wants to scrap the proposed 1 per cent additional levy for manufacturing states.
    • The third demand by the Congress was to change the composition of the GST council.
    • The proposed composition is for the Council to be two-thirds comprised from states and one-third from the Centre.
    • The Congress wants the Centre’s share to be reduced to one-fourth. This demand, however, was rejected by even the Rajya Sabha Standing Committee.

    Time to ponder on a few Questions! Some of these may make into Mains 2015!

    #1. Will GST really make a breakthrough for economic growth in India? Discuss.

    #2. Considering ongoing debate on the introduction of GST bill in Rajya Sabha, critically comment on the important features of the bill.

    #3. Critically analyse the structure, objectives and issues arising out of of the Goods and Services Tax system that the government wants to introduce in India?

    What do you think on it, Let’s know us!

     

    Published with inputs from Arun

  • Railway Reforms

  • Sugar Industry – FRP, SAP, Rangarajan Committee, EBP, MIEQ, etc.

  • Fertilizer Sector reforms – NBS, bio-fertilizers, Neem coating, etc.

  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

  • Microfinance Story of India

    Pradhan Mantri Mudra Yojana: Funding the unfunded

     

    Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of Government of India to enable a small enterprise come into the formal financial system and get affordable credit to run his/ her business.

    • Who? Any Indian Citizen who has a business plan for a non-farm sector income generating activity
    • Credit need? Less than Rs 10 lakh
    • Possible Creditors? Banks, MFI, or NBFC

    Types of Loans provided

    Under the aegis of Pradhan Mantri MUDRA Yojana, MUDRA has already created the following products / schemes.

    • Shishu : covering loans upto 50,000/-
    • Kishor : covering loans above 50,000/- and upto 5 lakh
    • Tarun : covering loans above 5 lakh and upto 10 lakh

    Note that there is no subsidy for the loan given under PMMY. However, if the loan proposal is linked some Government scheme, wherein the Government is providing capital subsidy, it will be eligible under PMMY also.

    What is MUDRA Bank and what is its role in the MUDRA Yojna?

    • MUDRA Bank = Micro Units Development and Refinance Agency Bank
    • The Rs 20,000 crore MUDRA Bank aims to provide refinancing to small and medium enterprises, particularly those from SC & ST
    • The idea is to refinance micro-finance institutions through Pradhan Mantri Mudra Yojana
    • This bank would be responsible for regulating and refinancing all MFIs which are in the business of lending to MSME

    Are there any concerns regarding the structure or establishment of MUDRA bank?

    • The bank will be financially challenged since inception, if it is funded through non-budgetary support
    • The funds for the bank would be sourced from shortfall in the achievements of the priority sector lending (PSL) targets
    • Currently, the shortfall in the PSL targets of the domestic scheduled commercial banks are deposited in Rural Infrastructure Development Fund (RIDF) and for foreign banks in Small Enterprises Development Fund
    • The fact of the matter is that banks have been surpassing the targets in all years, since 2002, except for the last three years
    • The shortfall lies only in agricultural loans, but it would be unfair to divert the target for agriculture from RIDF to micro units

    What are some of the positive points which go in favour of such a scheme?

    • Informal sector accounts for 90% of our non-agricultural workforce, 50% of the GDP & 40% of the non-farm GDP
    • Analysts point that the Indian GDP can be raised by almost 15% if the informal sector data is incorporated in the GDP series
    • The MUDRA bank aims to boost loans and cut borrowing costs for the cash-starved domestic small businesses

    But has a direct intervention from government (to facilitate loans) worked in past?

    What are some of the prominent concerns in this area?

    • There is always a case for direct government intervention to solve any one of our many chronic problems, to justify the need for MUDRA bank
    • The govt. is trying to ensure equity through determined government action that previously drove the govt. to nationalise banks and bring priority sector lending
    • However, such ‘directed credit’ has not worked successfully in the past
    • The govt. control over banks had led to large-scale corruption and repeated recapitalisation through taxpayers’ money
    • MUDRA bank has been over-burdened with many conflicting objectives and too-many roles, viz. a lender, consultant, regulator, think tank and an agent of social change

  • ISRO Missions and Discoveries

    Let’s cover the entire gamut of projects concluded by ISRO in these 2 years.

    IRNSS will be covered in a separate article.

    GSAT Series

    #1. GSAT-6

    • GSAT-6 is the twenty fifth geostationary communication satellite of India built by ISRO and twelfth in the GSAT series
    • Five of GSAT-6’s predecessors were launched by GSLV during 2001, 2003, 2004, 2007 and 2014 respectively
    • After its commissioning, GSAT-6 has joined the group of India’s other operational geostationary satellites
    • GSAT-6 Satellite provides communication through five spot beams in S-band and a national beam in C-band for strategic users
    • It was launched using GSLV-D6 (Explained below in GSLV Missions)

    #2. GSAT-15

    • It is a high power satellite being inducted into the INSAT/ GSAT system
    • It carries a total of 24 communication transponders in Ku-band as well as a GPS
    • Aided GEO Augmented Navigation (GAGAN) payload operating in L1 and L5 bands
    • It is the third satellite to carry GAGAN payload after GAST-8 and GSAT-10, which are already providing navigation services from orbit
    • It carries a Ku-band beacon as well to help in accurately pointing ground antennas towards the satellite
    • It was launched by Ariane-5 VA-227 launch vehicle from Kourou, French Guiana on early morning of November 11, 2015

    #3. GSAT-16

    • GSAT-16, an advanced communication satellite, weighing 3181.6 kg at lift-off, is being inducted into the INSAT-GSAT system
    • GSAT-16 is configured to carry a total of 48 communication transponders, the largest number of transponders carried by a communication satellite developed by ISRO so far, in normal C-band, upper extended C-band and Ku-band
    • GSAT-16 carries a Ku-band beacon as well to help accurately point ground antennas towards the satellite
    • The designed on-orbit operational life of GSAT-16 is 12 years
    • The communication transponders on-board GSAT-16 together ensure continuity of various services currently provided by INSAT-GSAT system and serve as on-orbit spares to meet contingency requirements or for the augmentation of such services
    • GSAT-16 was launched into a Geosynchronous Transfer Orbit (GTO) by Ariane-5 VA-221 launch vehicle from Kourou, French Guiana
    • GSAT-16 was positioned at 55 deg East longitude in the Geostationary orbit and co-located with GSAT-8, IRNSS-1A and IRNSS-1B satellites

    PAYLOADS OF GSAT-16

    1. 12 Ku-band transponders each with 36 MHz usable bandwidth with footprint covering Indian mainland and Andaman & Nicobar islands
    2. 24 C-band transponders each with 36 MHz usable bandwidth with footprint covering Indian mainland and island territories
    3. 12 Upper Extended C-band transponders each with 36 MHz usable bandwidth with footprint covering Indian mainland and island territories

    PSLV Missions

    #1. PSLV C28/ DMC3 Mission: Heaviest commercial mission ever undertaken by ISRO

    • PSLV in its 30th flight (PSLV-C28) launched three identical DMC3 optical earth observation satellites built by Surrey Satellite Technology Limited (SSTL), UK
    • PSLV-C28 was the ninth flight of PSLV in ‘XL’ configuration
    • With the overall lift-off mass of the five satellites amounting to about 1440 kg, this mission becomes the heaviest commercial mission ever undertaken by Antrix/ISRO
    • The three DMC3 satellites, each weighing 447 kg, were launched into a 647 km Sun-Synchronous Orbit (SSO) using the high-end version of PSLV (PSLV-XL) from Satish Dhawan Space Centre, Sriharikota (SDSC-SHAR), the spaceport of India

    DMC3

    1. The DMC3 constellation comprises of three advanced mini-satellites DMC3-1, DMC3-2 and DMC3-3
    2. It is designed to address the need for simultaneous high spatial resolution and high temporal resolution optical Earth Observation
    3. Launched into a single Low-Earth Orbit plane and phased with a separation of 120° between them, these satellites can image any target on the Earth’s surface every day
    4. Major application areas include surveying the resources on earth and its environment, managing urban infrastructure and monitoring of disasters

    It also carried two auxiliary satellites from UK:

    1. CBNT-1, an optical technology demonstrator earth observation micro satellite built by SSTL
    2. De-OrbitSail, a technology demonstrator nano satellite built by Surrey Space Centre

    #2. PSLV C30/ Astrosat

    • PSLV, in its 31st flight (PSLV-C30), launched Astrosat into a 650 km orbit of 6 deg inclination to the equator
    • Along with Astrosat, six satellites from international customers viz. LAPAN-A2 of Indonesia, NLS-14 (Ev9) of Canada and four identical LEMUR satellites of USA were launched
    • PSLV-C30 is the tenth flight of PSLV in its ‘XL’ Configuration

    #3. PSLV C29/ TeLEOS-1 Mission/ 6 Singapore satellites

    • PSLV, in its 32nd flight (PSLV-C29), launched six satellites of Singapore into a 550 km circular orbit inclined at 15 degrees to the equator
    • This is the eleventh flight of PSLV in ‘core-alone’ configuration (without the use of solid strap-on motors)
    • Of these six satellites, TeLEOS-1 is the primary satellite weighing 400 kg
    • The other five are co-passenger satellites which include two micro-satellites and three nano-satellites:
    1. VELOX-CI, micro-satellite
    2. VELOX-II, 6U-Cubesat technology demonstrator
    3. Athenoxat-1, a technology demonstrator nano-satellite
    4. Kent Ridge-1, a micro-satellite
    5. Galassia, 2U-Cubesat

    IRNSS Constellation

    The recent launches in this series are:

    #1. PSLV C-27/ IRNSS-1D

    #2. PSLV C-31/ IRNSS-1E

    #3. PSLV C32/ IRNSS-1F

    #4. PSLV C33/ IRNSS-1G

    IRNSS-1G was the 7th and last satellite in the IRNSS constellation.

    With this, India has achieved the milestone of being one the very few countries to have its own Positioning System.

    [IRNSS will be dealt with in detail in a separate story]

    GSLV Missions

    #1. GSLV-D6/ GSAT-6

    • GSLV-D6 is the ninth flight of India’s Geosynchronous Satellite Launch Vehicle (GSLV)
    • It is also the fifth developmental flight of GSLV
    • This is the third time the indigenously developed Cryogenic Upper Stage (CUS) is being carried on-board during a GSLV flight
    • GSLV-D6 flight is significant since it intends to continue the testing of CUS
    • GSLV is designed to inject 2 ton class of communication satellites into Geosynchronous Transfer Orbit (GTO)
    • GSAT-6 is explained above

    #2. GSLV-Mk III: Launching humans into space

    • ISRO killed two birds with one stone when the GSLV Mk3 test with an inert cryogenic stage took off with the CARE (Crew Module Atmospheric Re-entry Experiment)
    • The module reached an altitude of 80 km and made a successful splash down in the sea using the largest parachutes ever made in the country
    • Once operational, the crew module will host up to three Indian astronauts for orbital missions lasting up to a week in space
    • It will make India only the fourth nation in the world after Russia, US and China to have the ability to send humans into space; maybe even to the moon one day
    • According to ISRO the schedule for sending the first Indian on an Indian rocket is planned for 2021
    • For this, the GSLV Mk3 will have to be man-rated – it has to demonstrate a set number of continuous successful launches

    Reusable Launch Vehicle- Technology Demonstrator (RLV-TD)

    The cost of access to space is the major deterrent in space exploration and space utilization. A reusable launch vehicle is the unanimous solution to achieve low cost, reliable and on-demand space access

    Reusable Launch Vehicle-Technology Demonstration Program or RLV-TD is a series of technology demonstration missions that have been considered as a first step towards realizing a Two Stage To Orbit (TSTO) fully re-usable vehicle.

    A Winged Reusable Launch Vehicle technology Demonstrator (RLV-TD) has been configured to act as a flying test bed to evaluate various technologies, namely, hypersonic flight, autonomous landing, powered cruise flight and hypersonic flight using air-breathing propulsion.

    2015 Space Pioneer Award

    • Space Pioneer award for the year 2015 was presented to Indian Space Research Organisation (ISRO) in the Science and Engineering category during the 34th Annual International Space Development Conference held at Toronto in Canada during May 20 -24, 2015
    • National Space Society (NSS) of USA presented this award in recognition of ISRO’s efforts in accomplishing Mars Mission in its very first attempt
    • In 2009, NSS has presented similar award to ISRO in recognition of the great accomplishment they have made in the success of the Lunar Probe, Chandrayaan-1
    • National Space Society (NSS) is an independent nonprofit educational membership organisation dedicated to the creation of a space faring civilisation